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Saudi retailer posts record profits on expansion

Fawaz A AlHokair & Co says it has entered new markets, opened new stores to drive revenues

Saudi shoppers. (Photo for illustrative purposes only)

Saudi retailer Fawaz A AlHokair & Co on Monday posted record profits for the latest quarter as the company entered new markets and opened more stores.

Its net profit for the three months to end of March rose by more than 55 percent to SR 135.87m compared to SR87.3m in the same period last year.

Simon Marshall, the company's CEO, said: "We continued to deliver our global, strategic expansion plan during 2012, and had a very strong finish to the year.

"We delivered record profits, record margin increase, record number of new store openings, entered two new markets and successfully managed the acquisition and integration of Nesk Trading Projects."

Net profit for the 12 months ended March 31 was SR619.69m, an increase of 38.5 percent compared to the same period last year.

"The increase in net profit for the quarter... is due to the increase in the sales for the same stores and the successful opening of new stores, introducing new concepts & brands and the consolidation of the results of the acquired business Nesk trading projects," the company said in a statement.

Last month, a report said Saudi Arabia’s retail sector is set to continue growing despite concerns over wage inflation due to Saudization of jobs.

The NCB Captial report said that expansions through the openings of new stores, margin support from economies of scale, and consolidations of fragmented markets are key drivers of profit growth, but that price-led competition remains a key concern.